Reforms are the realistic way out

ZIMBABWE has risen two places on the World Bank Doing Business rankings, but for a country that has perennially fared dismally, a shift from position 161 to 159 out of 190 countries is nothing to crow about.

Editorial Comment

The World Bank, in its 14th year of publishing the rankings, has attributed the country’s marginal movement upwards to improvements in the ease of setting up a new business.

While this may appear worth celebrating, the country is in fact ranked 180 out of 190 in terms of setting up a business.
Zimbabwe also fared badly on access to key infrastructure, winding up business and on protecting minority investors.

Doing Business presents quantitative indicators on business regulation and the protection of property rights that can be compared across 190 economies — from Afghanistan to Zimbabwe — and over time.

The World Bank rankings also measure aspects of regulation affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

“Zimbabwe made starting a business easier by eliminating the requirement to advertise applications for a business license. Zimbabwe improved access to credit information by launching a new credit registry. However, credit scoring was discontinued, reducing access to credit information,” the World Bank report says.

In fact, this is a big non-event. Zimbabwe is still in the woods. The truth is that government is not prepared to go full throttle in embracing reforms. Government is only interested in token and superficial reforms which continue to spook investors. But piecemeal reforms won’t help anything at all.

Government’s continued failure to repeal the Indigenisation law — widely seen as the elephant in the room — is a case in point. Several business delegations and international financial institutions have on countless occasions said this law, in its current form, scares away investors.

Issues relating to the rule of law and property rights, on which we now sound like a broken record, have not been addressed over the years. Zimbabwe must bite the bullet and embrace a plethora of reforms prescribed by economic experts in order to attract capital. The current economic implosion requires more than cheap rhetoric to address.

Political will and commitment are critical.

This, coupled with other reforms required by multilateral lenders like the International Monetary Fund and the African Development Bank, should be urgently addressed.

For a country which has not had its own currency since 2009, only far-reaching structural reforms, underpinned by strong political will, can make the southern African nation a preferred investment destination. Unless and until that happens, Zimbabwe will continue scaring away timid investors and stuck in poverty.